Helping UK businesses with National Minimum Wage compliance
27/04/23
Earlier this month, the UK national minimum wages (NMW) and national living wage (NLW) increased. This came as part of the government’s attempt to accommodate low-paid workers struggling with the cost-of-living crisis. Continue reading for a full breakdown of the new wages…
Top Tip: Having a robust payroll function in place would provide peace of mind in your compliance by automatically notifying you of any staff wage increases required.
So, what are the changes?
In the 2022 Autumn Statement, Jeremy Hunt announced changes to each age bracket of the national minimum wages and the national living wage also. The changes were based on recommendations that were made to the government by the Low Pay Commission (LPC) in the autumn. A 9.7% wage increase has been received by those on the national living wage, which is thought to be a significant step towards reaching the Government’s target of two-thirds of median earnings by 2024!
An individual can begin earning National Minimum Wage from school leaving age (16), which then increases as they turn 18 and then again at 21. When an individual reaches the age of 23, they will be entitled to the National Living Wage.
| NMW rate | Annual increase (£) | Annual increase (%) | |
| National Living Wage (age 23+) | £10.42 | 0.92 | 9.7 |
| Age 21-22 | £10.18 | 1 | 10.9 |
| Age 18-20 | £7.49 | 0.66 | 9.7 |
| Age 16-17 | £5.28 | 0.47 | 9.7 |
| Apprentice rate | £5.28 | 0.47 | 9.7 |
| Accommodation Offset* | £9.10 | 0.4 | 4.6 |
If an employee has paid for certain things out of their wages, then the employer should deduct these payments before calculating if they have been paid the correct minimum wage. These payments may be for things that are for the employer’s own use or benefit, or for things that are required for the job but aren’t refunded (e.g., uniform and equipment). All other payments made out of an employee’s wage, such as deductions for tax and National Insurance, will be included when calculating whether wages have been paid correctly.
Sometimes, employees may be entitled to a higher rate of pay at manager discretion for certain shifts they work, such as overtime and bank holidays. Although this is not mandatory by law, if an employee is paid a higher rate for certain types of shifts, these do not count towards minimum wage calculations. Similarly, tips, service charges and cover charges cannot be included as part of the minimum wage.
At mgr, we’re urging employers to keep a close eye on their employees’ wages throughout the year, to ensure that they are paid the correct minimum wage for their age. Although the recent increases to wages will have been a welcome relief to minimum-wage workers, we understand that the increased cost of employment may have created further challenges for your business operations. Failing to pay the correct amount to employees at the start of the tax year could have a knock-on effect, meaning you could be required to make back-payments later in the year, putting a further stain on business finances.
At mgr, The Professional Payroll is our team of dedicated payroll experts, who can help you to stay on top of your employees’ wages, making sure that your entire workforce is paid fairly and in-line with regulations.
If you have any questions, please contact Dan Caleb from The Professional Payroll at dan.caleb@mgr.co.uk
